Lopsided equation between CFOs & boards

Metro India News | Hyderabad : Alignment between CFO and the Board is critical to fund key initiatives, maintain market credibility, good governance, mobilize finances, and to create a credible brand for the organization. That said, if Board and CFO have no friction at all it may mean that one of the two is less efficient than required. It is common that Board and its CFO see the Strengths, Weakness, Opportunities, and Threats (SWOT) of the company through different lenses.

This phenomenon is universal across the globe including where CFOs are also on the Board.   The alignment between CFOs and Boards in India is unique and interesting. Reports found that 70% of CFOs recruited from outside the organization resign within 2 years and those promoted from within stay for 5 years. Criminal and personal liability on CFOs is higher in India than in many countries including UK and the US. CFO exits are also higher in India.

Boards focus more on growth, market share, tie-ups, and brand image. CFOs focus more on cost of capital, credit rating, compliance, and controls. Divergence of views are mostly about capital allocation, investment priorities, risk management, financial reporting, and mergers & acquisitions (M&A). Boards are fine with bold bets and long term returns in the name of strategy. But CFOs feel pressurized on costs of capital, funding mix, and short to medium term returns as well.

Boards prefer dividends eyeing image in the business world, whereas CFOs prefer buybacks eying earnings per share (EPS). Boards made optimistic assumptions, but CFOs prefer execution realities. Boards are confident with forward looking insights whereas CFOs are comfortable with optimistic projections. Boards may be fine with higher leverage, but CFOs are concerned with credit ratings and compliances. Boards prefer M&As for strategy and market visibility. Many instances resonate divergences, and few are popular in the corporate world.

After IPO in year 2010, SKS Microfinance adopted aggressive acquisitions for growth which was resisted by its CFO. In year 2015 Infosys CFO opposed a $200 million acquisition citing unjustified higher valuation. In year 2025 CFO of IndusInd flagged long hidden internal irregularities which became sensation. Boards finding misalignment of their CFOs resulting in latter’s exits are not uncommon.  CFO severance instances include Ricoh India in 2016, CG Power in 2019, Brightcom in 2022, Wipro in 2023, Kajaria Ceramics in 2025, and SPEL Semiconductor in 2026.

CFOs evolved to enter top management and have been participating to represent organizations externally as well. However, many CFOs are burdened with the challenges of GST, Income Tax, FEMA, and MCA along with accounts, auditing, and valuation, the issues of which arise due to sub-optimal decisions of the Boards. 

Performance commensurate with responsibility is possible when CFOs have true independence, voting power, tenure protection, and chartered access to directly interact with investors, regulators, and media. History proved that none can be a better whistleblower than a CFO. Companies and Boards do not give adequate powers to CFOs unless regulation mandates. Its time law and regulation get Indian CFOs the required powers.

(Dr. Kishore Nuthalapati is serving as the CFO of BEKEM Infra Projects Pvt Ltd, Hyderabad.)